A man borrowed money for 2 years and paid back into equal annual instalments of ₹2,260 at 5% compound interest, compounded annually. What was the sum (in ₹, the nearest tens) borrowed?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 4,200.
Present Value (PV) = A/(1 + r)1 + A/(1 + r)2
PV = 2260/(1.05) + 2260/(1.05)2
PV ≈ 2152.38 + 2049.77 = ₹4,202.15 or = 4200